Archive: 2010

31 December 2010

  • A True ‘Japan Inc.’ Could Be on the Way – Wall Street Journal
    The WSJ speculates that Japan is quietly forming a sovereign wealth fund to increase returns (on forex reserves) and help secure Japan’s strategic and economic interests in global capital markets. 
  • Long-Term Mutual Fund Flows – ICI
    ICI reports on long term mutual fund flows report for the week ending 21/12/2010. Bond fund continued to see outflows with another -$4.4bn redeemed over the week (compared to -8.6bn redeemed last week, and over -$14bn redeemed in December so far). Will some of these redemptions rotate into equities as investors chase better returns? Domestic equity mutual funds had small but significant net inflows of $335mn over the week (vs -2.4bn redeemed last week, and over -$80bn redeemed ytd). While small, it is the first weekly net inflow since the beginning of May 2010. Meanwhile foreign equity funds continued to see strong inflows with another +$3.6bn for the week (vs +$2.2bn inflow last week and over +$50bn inflows ytd).
  • Banks Open Loan Spigot – Wall Street Journal
    More US green-shoots? The WSJ reports that after a near 2 year decline, C&I loans held by banks in the US are starting to grow again.
  • Irish banks’ ECB borrowings up 13.7 percent in November – Reuters
    Reuters reports that domestic Irish banks have significantly increased their reliance on central bank liquidity support in November, as deposit funds are withdrawn. 
  • In a spin – The Economist
    The Economist gets all bearish for 2011, highlighting risk dues to; European sovereign debt, US municipal debt concerns, global trade imbalance.
  • Why Can’t Europe Avoid Another Crisis? Why Can’t the U.S.? – The Baseline Scenario
    Baseline Scenario also warn of the inevitability of another European crisis possibly as early as the first quarter 2011. On that note – Happy New Year.
  • China Seeks Higher Payout From State Firms – Wall St Journal
    China detailed plans to make state-owned companies turn over more of their profits to the government. This is consistent with the broader push by the Chinese government towards improving income equality and more broadly a global trend of governments seeking a greater share of the corporate profits as they seek to fund growing public spending commitments.
  • Must See: Howard Davidowitz Destroys The Recovery Illusion, Debunks The Consumer Renaissance – Zero Hedge, Bloomberg
    A Bloomberg interview with retail expert Howard Davidowitz suggesting all is not well in US retail.
  • Three-way split: America, the euro zone and the emerging world are heading in different directions – The Economist
    The Economist explores the diverging prospects and policy responses in the US, Euro zone and emerging markets. The article warns that increasingly unstable global structural imbalances and self-serving policy initiatives have the potential to create significant short-term shocks for capital markets.

30 December 2010

  • Austerity may not be enough to save the EU’s weakest links – The Independent
    Credit ratings agency Moody’s (via The Independent) warns that despite austerity measures, debt default is still likely for some European countries.
  • A Fed-Induced Speculative Blowoff – Hussman Funds
    More on why US Treasury yields have risen recently despite on-going QE. John Hussman argues that the rise in yields is due to a Federal engineered ‘risk asset rally; causing funds to flow out of safe assets (bonds) and into riskier ones.
  • AIG Stock’s Unlikely Comeback – Wall Street Journal
    The WSJ reports that AIG is back from the dead, defying critics to become the fourth-best performer in the S&P 500 index this year.
  • Short Interest Declines to Lowest Levels Since 2007 – Bespoke Investment Group
    Another day another positive sentiment indicator. The Bespoke Investment Group highlight that S&P short interest declines to the lowest levels since 2007.
  • Loans Make Comeback as New Issuance Doubles: Credit Markets – Bloomberg
    Bloomberg notes an increase in leveraged loan issuance in the US – suggesting 2011 may see more M&A activity.
  • Austerity may not be enough to save the EU’s weakest links – The Independent
    Bloomberg reports that China CEO’s are reducing their support of a stronger RMB.
  • U.S. changes how it measures long-term unemployment – USA Today
    A sign of the times… in recognition of the increase in long-term unemployment the US federal Bureau of Labor Statistics (BLS) plans to raise from two years to five years the upper limit on how long someone can be listed as having been jobless.
  • Google Pushes Education Software to Schools Through App Store – Bloomberg
    Technology is driving significant changes in the way education is taught in schools and colleges and is seen as a key driver of education reform and improving education standards. This is both a threat an opportuntity for the incumbent education publishing companies as the big tech companies like Apple and Google, and more recently media conglomerate News Corporation, step up investments in the education software industry.

29 December 2010

  • S&P / Case-Shiller Home Prices Indices – Standard & Poor’s
    More bad news for US housing. S&P/Case-Shiller released their monthly Home Price indexes for October. The Composite 20 index is off 30.5% from the peak, and down 1.0% in October – worse than expectations.
  • House Prices and Months-of-Supply, and Real House Prices – Calculated Risk Finance & Economics
    Calculated Risk suggests the recent surge in existing home inventory is swamping demand, suggesting US home prices have further to fall.
  • 2011 will be the year Android explodes – CNNMoney.com
    Fortune’s Seth Weintraub speculates that smart phone growth in 2011 will ‘explode’ driven by better wireless infrastructure and cheaper hardware.
  • Investors Attempting to Dump Bonds Push Bid Index Near Record: Muni Credit – Bloomberg
    More concerns about rising bond yields. Bloomberg speculates that bond fund outflows are partially responsible for the recent rise in US bond yields.
  • Weak 5 Year Auction Spooks Bonds, Big Tail To When Issued – Zero Hedge
    Zerohedge noted the surprisingly weak outcome from yesterday’s US bond auction.
  • Changes in the yield curve – Econbrowser
    Econbrowser notes that rising yields in the US simply a sign of a recovering domestic economy.
  • Why don’t Chinese spend more money? – The Curious Capitalist
    The latest Time magazine analyses why China’s consumer are unwilling to spend more.
  • China Rate Hike: Four Markets to Watch – Global Macro Monitor
    China gives a surprise Christmas present to global risk appetites – by raising lending and deposit rates by 25bps. Global Macro Monitor highlights which markets to monitor to help gauge investor reaction to this move.
  • Auto imports policy in the making – China Daily
    The China Daily reports on a series of new policies which attempt to actively encourage automobile imports over the next five years.
  • China Ends Small-Car Tax Break – Wall St Journal
    China’s Ministry of Finance confirmed that it will end a tax break for purchases of smaller cars that has helped to drive auto sales in the last two years.
  • China to Tighten Limits on Rare Earth Exports – The New York Times
    China’s commerce ministry announced on Tuesday in Beijing a steep reduction in export quotas for rare earth metals in the first months of next year, a move that threatens to cause further difficulties for manufacturers already struggling with short supplies and soaring prices.
  • States Begin Slow Recovery as Revenues Increase – The Fiscal Times
    Improving corporate profits and retail sales are helping to improve US state tax budgets.
  • Beijing City to Raise Minimum Wage by 21% – CNBC
    A sign of growing inflation in China, Beijing City announces its second significant minimum wage hike in just 6 months. Similar wage hikes have been implemented across the country as the Chinese government attempts to balance income (in)equality with the rising cost of living in China.

24 December 2010

23 December 2010

22 December 2010

  • FCC Is Set to Regulate Net Access – New York Times
    The United States FCC is set to pass a watered down net neutrality rules. The bill is seen as a compromise between preserving open access to the internet and allowing the Cable and Telco companies to generate a return on their investment in critical infrastructure to support internet access and services.
  • Trying Out a Revamped Myspace – All Things Digital
    All Things Digital review the revamped Myspace, with its focus on topics in popular culture, including television, music, movies, celebrities and comedy.
  • Brussels clears News Corp bid for BSkyB – Financial Times
    European competition authorities have unconditionally cleared News Corp’s proposed bid for British Sky Broadcasting.
  • Congress and SEC Hit Stocks Made in China  – Wall St Journal
    Following a number of recent accounting and corporate governance issues the Securities and Exchange Commission has begun a crackdown on the practices of the “reverse takeover” market for Chinese listings.
  • Poor governance now seen linked to inferior returns – Financial Times

17 December 2010

16 December 2010

15 December 2010

14 December 2010

10 December 2010

6 December 2010

3 December 2010

  • Why IMF Says Hong Kong Isn’t a Property Bubble – Wall Street Journal
    A source of almost endless debate in Hong Kong & China. Affordability metrics suggest bubble risk, but other factors (mainly liquidity related) are more ambiguous. The WSJ article includes links to the source IMF reports.
  • Lexus’ $311,000 Cars Make China Sales More Profitable Than U.S. – Bloomberg
    A sign of the times that Lexus (Toyota) make more money per vehicle in China than the US. Will be interesting to see when Lexus start to manufacture locally in China given the success of Audi, BMW, Mercedes etc with their local operations.

15 October 2010

2 September 2010

  • The great false choice, stimulus or austerity – Financial Times
    Great summary of real fiscal issue from IMF. Must read. The debt that has been incurred was not by stimulus packages that have failed to deliver to the discredit of Keynesianism, but by governments before the crisis either indulging in unsustainable largesse  of social welfare, or miscomprehending the vulnerability of their revenue take to a collapse in incomes from financial assets.
  • Time is running out for the West – UK Telegraph
    The demographic bomb collides with current weak fiscal positions… there is not much time to get our act in order…
  • The conservative counter-revolution – Financial Times
    Did Reagan and Thatcher create wealth? The evidence now suggests that the wealth was just financial leverage, the financialisation of the economy, over accentuating the productive potential of the economy… The reality is likely more to be that there was productive enhancement, but ultimately financial profits became much easier…
  • US borrowers pay down mortgages – Financial Times
    The debt overhang has meant that savings in borrowing costs is being used not to boost consumption of certain durables, particularly houses, but to pay down mortgage balances. The good news in this is that it accelerates balance sheet repair. Consumption demand for goods such as consumer electronics seems to hold up. It is housing where the problem sits.
  • Why Wall St. Donors Are Deserting Obama – New York Times
    http://www.nytimes.com/2010/08/31/business/31sorkin.html?dbk
    We have met business figures who have described Obama as a Communist. It is concerning the emotive language that is being used. What does this do to the increasingly difficult task of governing America? In Asia there are those that characterise the US as a failed state.
  • Japanese economy slows unexpectedly – Financial Times
    The high yen adds to factors  now impinging on the economy. Policy response? Rumoured, but thus far negligible.
  • Germany: On a roll – Financial Times
    The big positive surprise last week was the strength of the German economy. Is this sustainable? Is a two speed world sustainable? This one of our leading questions. Germany is now exporting more to China than it is to France.
  • Germany’s rebound is no cause for cheer – Financial Times
    But is Germany really growing, or just recovering from a bigger hole?
  • China fund bond sale faces criticism – Financial Times
    The capital structure of Chinese banks given suspicion of lax lending, is expected to be reinforced. But banks lending to a vehicle to buy there own shares smells deeply suspect.
  • Indian economy expands at fastest pace in nearly three years – UK Telegraph
    But the good news is that India is booming…
  • India Faces Intifada-Like Revolt in Kashmir – New York Times
    The Arc of Geopolitical Instablity extends from the Middle East to Pakistan and India. With Pakistan now brutally challenged by tragic flooding, Kashmir is erupting in India. The capacity of the Indian government to keep on top of this may not be as strong as believed. Geopolitical instability remains a major if unquantifiable threat.
  • ‘Hindenburg’ Creator Sticks to Guns – Wall Street Journal
    In Bear world… and there is a lot to be concerned about…  there is the land of the ultrabears… and amongst technicians this is most captured by the idea of the Hindenburg Omen…  The WSJ calls it “Recession Porn”… how sick is America? Are we doomed for a crash?
  • Insiders’ reaction to August’s decline – Market Watch
    But insider buying is picking up…
  • Relocated labels – Financial Times
    Asia has become the driver of the luxury industry. Now they want to own part of it… Note Hermes has set up a China made luxury label.
  • Apple Issues Invitation For September 1 “Special Event” – blogs.barrons.com
    And something is coming from Apple…
    The Apple tv revamp…
  • Apple’s New Video Strategy Coming Into Focus – Businessweek
  • Why Apple’s iTV Will Change Everything – kevinrose.com
  • Sony rises to digital-media challenge – Financial Times
    Everyone is looking to get into this game… home entertainment convergence seems likely to start a battle for competing platforms… It is not just Apple.
  • Amazon Grabs the TV Remote – Wall Street Journal
    Add Amazon to the list of digital offerings…
  • A Look at the Reading Habits of E-Reader Owners – Wall Street Journal
    We are very interested in the impact of new devices on the  shifting media model.
  • Cisco making a play for Skype? – Businessweek
    Even Cisco sees that a technological threshold may be passed whereby it needs to broaden its product base… but is Skype the answer? Video messaging is a huge “idea” for Cisco…
  • Computer Chips Seem Poised to Shrink Again – New York Times
    Moore’s  Law and the singularity hypothesis is one of our core mega trends. Always interesting to note that computer chip shrinkage potential continues…

12 August 2010  

4 August 2010

  • China: A new core rises – Financial Times
    Newsflow continues to be highly focused on China’s “next growth opportunity”.
  • Royal Bank of Scotland to be snapped up by Chinese bidder? – UK Telegraph
    Over my career the English have had a tradition of selling troubled assets, little being sacred. Historically buyers were American or from the continent. More recently we have seen the Indians enter the market, and now perhaps China. Ironically symmetrical, given HSBC, a long standing symbol to the Chinese of a colonial past.

3 August 2010

  • Is Italy Too Italian? – New York Times
    Great article about Italy. The problem facing Europe is that in many instances it is gridlocked in traditional work practises that the massively changed world can no longer support. Fiscal austerity will not solve this problem. Learning how to embrace change whilst retaining the special is the answer. Little sign that it can be done.
  • Berlusconi faces crunch vote – Financial Times
    Silvio Berlusconi’s government has been besieged by scandal, but as importantly Italy requires decisive leadership to reinvigorate productivity… but like governments across Europe, Italy is grid locked.
  • Fears over Wilders’ support for Dutch coalition – Financial Times
    Holland grid locked.
  • Bernanke cautions on US recovery – Financial Times
    Central bankers speak with concern re the US economy.
  • Why It Still Feels Like a Recession – New York Times
    Alan Greenspan talks of the structure of the US recovery being highly to large corporations and the wealthy. Politically this is a problem for Obama, and until the bulk of the population feel encouraged the economy risks a double dip.
  • Within the Fed, Worries of Deflation – New York Times
    And most starkly last week James Bullard, who had been characterised as an inflation hawk, changed camps in a manner of speaking, warning of an issue which preoccupies us… that traditional Fed policy of low interest rates of little use facing deflation. There is an expectation in the market that some form of further Quantitative Easing.
  • Mortgage investors scale back – Wall Street Journal
    Government may intervene in the US mortgage market to kickstart action. This parallels talk of QE. Many governments struggle with how to get liquidity into the system.
  • Federal Report Faults Banks on Huge Bonuses – New York Times
    To Greenspan’s point… the rich are getting richer. This is political dynamite.
  • Rise in wheat prices fastest since 1973 – Financial Times
  • AT&T, Verizon to Target Visa, MasterCard With Smartphones – Bloomberg
    Long awaited, phone payment based systems seem imminent.
  • Chinese banks face state loans turmoil – Financial Times
    Much discussed in the press over the past week, “revelations” coming from the audit of Chinese banks focusing on exposures to Local Government Funding Vehicles. The market seemed to take this in its stride. Whilst significant the bulls argue that the impact will be on smaller banks, and the government exposures will be managed down by authorities, so whilst significant they have been viewed as manageable. We watch on…
  • PMI fall points to economic growth slowdown – China Daily
    Chinese numbers suggest a slowing economy, but the market has read this as good news; as the economy slows, the authorities can take their foot off the brake, and potentially start a new round of growth initiatives. Discussion now very much focuses on low end housing as the new target.

26 July 2010

  • 2010 EU Wide Sress Testing – CEBSEurope and their banking system ‘stress test’ results dominated news over the weekend.
  • EU Bank Stress Tests Fail to Reassure Investors Wary of Capital Criteria – BloombergBloomberg summarises the results and market reaction. Seven banks fail and need to raise a combined E3.5bn of capital vs market expectations of between E30bn and E85bn.
  • EU stress tests: who knows, who cares? – ReutersChristopher Whalen at Reuters nicely summarises the differences between this stress test and the market clearing US version post the GFC.
  • Nomura thinks you should be more bearish on Hungary – FT AlphavilleThe FTAlphaville reports on a Nomura research piece highlighting increasing risks for the Hungarian economy. Hungary is no longer going to pursue the IMF/EU deficit targets required for IMF funding support. Contagion risks into Austria (see stress test for bank exposures) and other Eastern European countries.
  • Ulster Bank got further capital top-up before Christmas – Irish TimesThe Irish Times predicts more problems for the Irish banking system, expecting more capital raisings for the sector before Christmas.
  • China’s Banks Said to See Risks in Loans – BloombergAnd in other banking news, Bloomberg reports that Chinese Banks see risk to 23% of the LGFV loans – ($240bn risk on $1.1tn). The leak is coming from the Chinese Banking Regulator (CBRC), so presumably it is fairly accurate.
  • China banks fear falling confidence – Financial TimesAnd the FT reports that the Chairman of China Construction Bank, Mr Guo Shuqing, is concerned that faltering confidence in the Chinese economy could threaten the plans of the country’s banks to shore up capital reserves. He was not worried about LGFV loans because “quite a lot of these companies are commercial companies, which are operating businesses with cash flows, like tollways, ports and railways”. He estimated that about one-third of last years LGFV’s were to companies which are not generating cash flow … which may make loan servicing somewhat difficult.
  • Chinese Central Bank Outlines Plan To Ditch The Dollar As The Yuan’s Peg – Business InsiderStaying in China, Business Insider reports that the Chinese Central Bank is investigating plans to peg the yuan to a basket of foreign currencies rather than just the $US.
  • U.S., South Korean Forces Begin Naval Exercises Denounced by North Korea – BlooombergFinally Bloomberg reports on tensions are rising again in the Korean Peninsula, as the US and South Korea have engaged navel ‘exercises’. North Korea has responded diplomatically saying they will “legitimately counter with their powerful nuclear deterrence the largest-ever nuclear war exercises to be staged by the U.S. and the South Korean puppet forces”.
  • China gas growth to hit western groups – Financial TimesAlternative gas sources, such as shale, materially altered the US gas market in recent times. Expectations are now raising that China will enter this field. What are the implications?
  • E.P.A. Considers Risks of Gas Extraction – New York TimesWe are highly focused on this question. Gas extraction by “fracking” is now associated with environmental consequences raising serious concerns, and regulatory focus.
  • A test cynically calibrated to fix the result – Financial Times 
  • Action on carbon is down the drain – Financial TimesWe are deeply concerned by this long expected failure. How can needed action on climate change compete with immediate man made disasters.
  • How to Get 10% GDP Growth – Wall Street JournalIndia has very much become a centre of global attention as a growth driver, needed as China begins to alter course.
  • Investors Say No to ‘Let’s Expand’ Companies – Wall Street JournalIdea that investors are negative on companies investing to expand fearful that it will be wasted in a double dip may become of itself a constraint on growth in developed markets.
  • Wells Wins in a Japan-Style Slump – Wall Street JournalOur largest US bank holding, the case explained.
  • Deflation Defies Expectations—and Solutions – Wall Street JournalDeflation?
  • The Death of Paper Money – UK TelegraphOr Hyper Inflation?

21 July 2010

19 July 2010

13 July 2010

  • Lacker Says Any Consideration of Fed Interest-Rate Easing Is `Very’ Remote – BloombergBloomberg reports that Federal Reserve Bank of Richmond President Jeffrey Lacker weighs in on the QE2 debate. Says any consideration of further monetary easing by U.S. central bankers “is very remote”.
  • Crisis Awaits World’s Banks as Trillions Come Due – New York TimesWhile the world focuses on Sovereign debt, the NY Times speculates that a looming crisis could be coming in relation to the rolling of trillions of dollars of short term debt that banks will need to refinance over the next two years. I hope those Aussie banks have got their short term funding in place.
  • Merkel’s Rules for Bankruptcy – Spiegel OnlineDe Spiegel speculates that the German government is looking for a Plan B for club med sovereign default which includes private investor haircuts and affected countries giving up some rights to sovereignty.
  • Europe’s complex crisis, in some simple powerpoints – FT AlphavilleThe FT Alphaville has a great power point presentation on Europe’s crisis … things are so much easier to explain with pictures.
  • Deutschland über alles does not mean a trickledown recovery in EMU – UK TelegraphAmbrose Evans Pritchard at the Telegraph reports that good economic news in Germany, is not necessarily good news for the EU.
  • Even eurozone optimists are not optimistic – Financial TimesAnd on a similar theme, Wolfgang Munchau at the FT comments on European economic imbalances.
  • What to make of China’s slowing imports? – MarketwatchEveryone focused on that massive China export number yesterday … but what should we make of their slowing imports? Marketwatch speculates that the stimulus investment boom may be about to end.
  • China’s little emperors demand their due – Financial TimesAn op-ed from Geoff Dyer of the FT on China’s “Gen Y” (i.e. those born in the 80’s and 90’s). What is as interesting to us about China’s “little emperors” as their views on politics & housing is how with a very different set of aspirations & values to their parents their demand for all manner of consumer items is bringing a whole new set of consumption patterns to the China market. Clearly something to watch closely.

9 July 2010

  • U.S. 30-Year Fixed Mortgage Rates Fall to Record 4.57%, Freddie Mac Says – BloombergWhy is US consumer spending so resilient in the face of weak employment trends? Bloomberg reports that Mortgage rates are falling to record lows supporting another mini refi boom. “The average 30ry rate declined to 4.57 percent in the week ended today, the lowest since Freddie Mac began compiling the data in 1971, the mortgage-finance company said in a statement.”
  • Bearish Sentiment Surges – ForbesForbes reports: that the contrarian indicator bearish sentiment surges. Bearish sentiment, expectations that stocks will fall over the next six months, surged 15.1 percentage points to 57.1%. This is the 15th highest level reading for bearish sentiment since the survey started in 1987. The historical average is 30%. With the market following the ‘line of most pain’ this suggests we may continue to see a reasonable bounce in equity markets.
  • Oil-Sands Push Tests U.S.-Canada Ties – Wall Street JournalAmerica’s great hope for domestic oil supply (now that the GOM has been short term curtailed), the Canadian oil –sands, look to be stalling. WSJ reports.
  • ISuppli Boosts ’10 Revenue Estimate For Semiconductor Foundries – Wall Street JournalISuppli boosts ’10 revenue estimate for semiconductor foundries. WSJ reports.
  • Baltic Dry Drops Another 4%, Below 2000, Longest Decline On Record Enters 31st Day - Zero HedgeBaltic Dry Index continues its fall. Drops another 4%, now below 2000, is the longest decline on record. Zero Hedge responds to claims in the FT yesterday that the BDI is losing its predictive powers.
  • Banks Will Need More Cash After Stress Tests – Wall Street JournalWSJ reports that Credit Suisse thinks Banks across the euro area will probably need around $115bn of additional capital to plug holes in their balance sheets revealed by stress testing.
  • Europe Stress Tests May Underestimate Probable Losses – BloombergBloomberg reports that Evolution securities thinks stress tests won’t achieve desired outcomes: “This isn’t a stress test. It’s merely the current valuation of government bonds.”
  • Early Reports on European Stress Tests — Ain’t So Tough – Credit WritedownCreditWritedown notes that CDS markets – alongside analysts – seem to be pricing in odds of a larger sovereign debt haircut than the CEBS suggests.
  • Now for the downside on AgBank’s IPO – FT AlphavilleFT Alphaville is negative on the upcoming Agricultural Bank of China IPO.

8 July 2010

7 July 2010

  • Yang Liu: China’s female Buffett – China DailyChina Daily interview with Yang Liu, a well known China fund manager, highlighting that her “study” of government policies means “her preferred industries are insurance, medicine, commodity, retail and real estate”.
  • India Needs ‘Contingency Plan’ to Contain Inflation, Jalan Says – BusinessweekInflation in Asia is part of the equity market’s worst case scenarios. India is precariously dependent on monsoon rains as we keep noting.
  • Fuel protests bring India to a halt – Financial TimesIndian inflation remains a concern. At the same time India has subsidised fuel prices putting a strain on its budgetary position.
  • Investors fear rising risk of US regional defaults – Financial TimesWhilst US Federal government spending programmes might be viewed as stimulatory, at local and state government level the capacity to sustain deficits is restricted. These restrictions are currently producing a marked ratcheting down of aggregate government spending in the US. Over and above this sits the question of the possibility of regional default. How will the US authorities sit behind weak states like California and Illinois? Are they like Spain and Greece. Market concerns are rising, though the USA is far less likely to face the hurdles Europe has in coordinating policy between nations.
  • Tokyo’s Latest Tax Blunder – Wall Street JournalTokyo has famously tightened its economy at moments that many observers have felt vastly inappropriate. Are we seeing history repeat?
  • Too many betting on rally – MarketwatchIs the market really bearishly positioned, or are traders thinking this is a buying opportunity from oversold levels?
  • The water market: a thousand times bigger than oil by 2030 – Platts.com
  • Andy Grove: How America Can Create Jobs – BusinessweekAbsolutely critical- Intel’s Andy Grove denies that there current business models support job creation in US… but does “Hon Hai” have to move back to America?
  • Demand shortfall casts doubt on early austerity – Financial TimesWolf is the champion of a less aggressive Keynesian view than Krugman. The warning bell is rung re premature austerity. Wolf adopts a stance that we are seeing discussed more globally, that barring monetisation debt default may be the alternative if we decelerate too rapidly.
  • Germany basks in ‘fairytale’ summer optimism – Financial TimesNote that German exports are currently showing a dramatic uptick, potentially explaining there preparedness to talk fiscal austerity now. The question is whether the current export strength is sustainable.
  • China’s property market braced for 30pc drop – UK TelegraphPicking up from Ken Rogoff’s comments over the weekend, and numerous other longer term bears there is a growing expectation that we are to see now the roll over in property prices driven by the confluence of tighter credit and more supply.

6 July 2010

5 July 2010

4 July 2010

  • An Open Letter to President Roosevelt – Scribd.comWas Keynes a secret Austerian (Austrian / Austerity)? Keynes 1933 open letter to FDR relating to his thoughts on the risks of continuing loose monetary and fiscal policy.

2 July 2010

  • Strong demand for Agricultural Bank of China shares – The TimesGiven 11 “cornerstone” investors (Stan Chart, Rabobank, Kerry Stokes et al) have pledged to take ½ of the HK deal (US$5.45 billion) perhaps not a surprise that the deal, the last of the first 4 state banks in China to list, looks like it’s well covered. The books are now closing a day early, on Monday (5pm HK time) given the “strong demand”.
  • Whisky Galore – FT AlphavilleAs FT Alphaville points out this looks to be a novel way to plug a pension fund deficit – Diageo’s UK pension scheme deficit of £862 million being filled with 2.5 million barrels of maturing Scotch whisky.
  • Building a second home in China – McKinsey QuarterlyAccording to McKinsey MNC’s hoping to succeed in China “can’t treat it as an interesting side bet any longer; they need to take China as seriously as they do their home market”. A number of MNC’s still seem to manage their China operations with the exact same approach that has worked elsewhere in the world and from head office without sufficient local tailoring. The most successful MNC’s in China (e.g. Yum Brands) have a highly tailored approach with local management and autonomy.
  • Local rumours in China of the first “tycoon” (Liu Yiqian) in financial trouble from within the property sector – Hexun.comOne for the Mandarin speakers out there. According to the article in 2009 Liu Yiqian invested RMB 8.1 billion into A share stocks (mainly property related e.g. Poly, Gemdale, etc) using around RMB 1 billion of his own money and using the stocks as collateral borrowed RMB 7.1 billion. For the property investments the unrealised loss is reported to be –RMB0.45 billion based on 24th of June prices. Though property buyers do not seem too leveraged (low LTV’s, high % of cash buyers, etc) this highlights there are risks that a number of developers / investors could be quite leveraged given most of it is hidden leverage. Sounds like the China art market might also suffer a bit if the rumours are true.

1 July 2010

30 June 2010

29 June 2010

28 June 2010

27 June 2010

  • The Third Depression – New York Times
    Paul Krugman from the NY Times speculates that policy failure will lead the world into a ‘third depression’.

23 June 2010

22 June 2010

  • Japan sets targets to rein in debt – Financial Times
    Austerity is now the talk ahead of the G20. Should Japan tighten or monetise? Many have been begging them to loosen QE, but the Japanese have said no. 
  • Purchases of U.S. Existing Homes Unexpectedly Dropped in May – Bloomberg
    Bloomberg reports sales of previously owned homes unexpectedly fell in May as demand began to slip even before a government tax credit expires. Purchases of existing houses, which are tabulated when a contract closes, decreased -2.2 percent vs +6% expectations.
  • Existing Home Sales: Inventory increases Year-over-Year – Calculated Risk
    Also worryingly on the housing front was the inventory increase, which is likely to weigh on prices over the next few months. Calculated Risk reports that inventory increased 1.1% YoY in May. This is the second consecutive month of a year-over-year increases in inventory.
  • Aluminum Production Cuts Loom in China on Record Output, End of Yuan’s Peg – Bloomberg
    Chinese aluminum producers may cut output from a record if the price slump persists and after the world’s third-largest economy signalled an end to its currency’s fixed rate to the dollar. China, the largest maker of the metal, produced 1.42 million metric tons in May, the highest ever monthly total.
  • Study: Subprime Lending Fueled by Campaign Cash – Wall Street Journal
    WSJ reports on the obvious: A new study finds that the mortgage industry boosted its campaign contributions to congressional districts that had a large share of subprime borrowers during the housing boom in order to influence government housing policy.
  • Is Illinois the New California? – Real Clear Markets
    Real Clear Markets reports that Illinois has overtaken California as the worst credit risk among American states.
  • Handling China mega-IPO brings prestige … and pain – Reuters
    Reuters reports that Wall Street is working hard for a new boss – the PBOC.
  • Osborne delivers kill or cure Budget – Financial Times
    The UK does austerity as Osborne delivers a tough budget. The FT writes up details.
  • Credit Agricole to Take $490 Million Loss on Emporiki Bank of Greece Stake – Bloomberg
    Bloomberg reports that Credit Agricole will take a Eur400 million writedown on its stake in Emporiki Bank of Greece SA as it expects higher losses at the unit this year.

21 June 2010

20 June 2010

19 June 2010

17 June 2010

  • That ’30s Feeling – New York Times
    Krugman from the NY times worries that Europe is repeating the same mistakes the US made in 1936-37 – withdrawing fiscal support for their economy before it has had anytime for recovery.
  • The euro mutiny begins – UK Telegraph
    Ambrose Evans-Pritchard from the UK Telegraph warns that severe Euro austerity may by economically counterproductive.
  • China’s high saving rate: myth and reality – Bank for International Settlements
    One for the weekend – BIS paper on China’s high savings rate.
  • In Nigeria, Oil Spills Are a Longtime Scourge – New York Times
    If you think Louisiana is bad, we have been turning a blind eye to an ecological disaster in Nigeria. The response is likely to reach across the globe.
  • Apple, AT&T Cite Record iPhone Sales – Wall Street Journal
    Apple’s momentum continues. Customer satisfaction is so high that customers with older phones are rushing to upgrade. The iPad is proving to be a disruptive product. In tech winners keep winning till a paradigm shift.
  • Nokia Cuts Quarterly Outlook – Wall Street Journal
    And losers keep losing.
  • The insanity of deepwater oil wells – Slate.com
    Deep water drilling whilst critical for supply is also likely to be subject to brutal regulation.
  • India hopes monsoon will tame inflation – Financial Times
    Inflation across the region is the critical concern. In India, domestic food supply and the state of monsoonal rains is the critical issue. Climate becomes pivotal to one of the few remaining growth engines of the world economy.
  • Chinese Bank Regulator Warns of Loan Risks – Wall Street Journal
    China’s banking regulator attempting to be pre-emptive and trying not to repeat the mistakes of other banking regulators.
  • Lee’s Henderson Says 20 Apartment Sales Scrapped – Bloomberg.com
    Strange goings on in the HK property market including the cancellation of the “world record” apartment price (costing US$56.6 million at US$11,300 per sq ft). Local press reports suggest 24 luxury units were sold to a single buyer, a Vietnamese tycoon, who has now cancelled the contracts for 20 of the 24 units at 39 Conduit Road in the mid-levels district.
  • In China, Labor Movement Enabled by Technology – New York Times
    Mobile communications are changing the way the world works. The implications reach into the political. A not much cited study by Alcatel suggested that the Indian caste system might not be able to survive SMS as it mobilised action. And now in China we see this.
  • How to Make Sense of Microsoft’s Multiple Mobile Operating Systems – PC World
    Apple keeps winning because the alternative is… chaos? At least from Microsoft.

16 June 2010

15 June 2010

  • Bullard Says Europe Woes Shouldn’t Delay Fed Increase – Bloomberg.com
    Bullard goes ‘hawkish’? Europe’s debt crisis shouldn’t postpone an increase in the Federal Reserve’s benchmark interest rate, a regional Fed president said, differing from at least two of his colleagues.
  • Firms Boost Pay for Chinese – Wall Street Journal
    More China labour unrest. This time at the Honda plant in Guangdong.
  • Spanish banks break ECB loan record – Financial Times
    FT reports that Spanish banks need to borrow record amounts from the ECB as they have been shut out of the wholesale funding.
  • Fainting Spells – Slate
    Afghanistan appears not to be improving. What does the likelihood of a Western exit mean? Watch this space.
  • Exxon, Oil Companies Slammed for ‘Carbon-Copy’ Plans – Bloomberg Businessweek
    What will the cost of the inevitable and now clearly necessary regulatory response be to this disaster?
  • Bank of England to cap mortgages – UK Telegraph
    In Britain, possibly the most exposed major Western economy the budget looks to represent a dramatic sea change. The implication that regulations are likely to step into giving the Bank of England control of the levels of lending/leverage permitted by banks could be extraordinary, amazing coming from the right wing Tory Party, not from the left.
  • China: where’s the inflation? – China Financial Markets
    Michael Pettis comments on why we are not seeing Chinese inflation.

14 June 2010

  • Wall Street faces defeat in push to retain swaps desks – Financial Times
    The FT reports that banks are likely to lose a key lobbying battle in the US over whether they will be forced to spin off their swaps desks.
  • Lincoln Considers Compromise on Swaps-Desk Provision – Bloomberg.com
    And more on swaps desks. Bloomberg reports that Senator Blanche Lincoln is considering compromise language to her derivatives proposal that would phase in over two years a requirement that commercial banks push out their swaps trading desks to subsidiaries.
  • America’s Minicipal Debt Racket – Wall Street Journal
    More US Municipal debt worries. WSJ reports that State and local borrowing as a percentage of US GDP has risen to all time high of 22% in 2010.
  • Eurozone industrial production surges – Financial Times
    More evidence of the benefits of a weak Euro for export orientated European countries. Industrial production in the Europe grew for an 11th consecutive month in April, but with wide divergences between the performance of the so-called core and peripheral members of the currency bloc.
  • BIS: Exposures to PIGS by Nationality of Banks – Calculated Risk Finance & Economics
    The BIS reports the exposures to PIGS by nationality of banks. It’s easy to see why the French and Germans are so concerned with bailouts.
  • AXA fears ‘fatal flaw’ will destroy eurozone – UK Telegraph
    Ambrose Evans-Pritchard from the UK Telegraph reports that AXA believes the EU won’t survive in its current form. Rescue package will only buy them 18months.
  • Overview: fiscal concerns shatter confidence – BIS
    Finally some weekend reading. BIS Quarterly review, takes a look at who is holding all the problematic sovereign debt, and counter party risks.

11 June 2010

  • China faces wave of strikes after Foxconn pay rise – UK Telegraph
    If you have got this far – good on you. I will send out separately. Fears of growing labour unrest in China deepened on Thursday as a series of strikes were reported around the country after workers at Honda and electronics assembly giant Foxconn won dramatic pay rises last week.

10 June 2010

9 June 2010

8 June 2010

7 June 2010

4 June 2010

1 June 2010

31 May 2010

30 May 2010

29 May 2010

28 May 2010

27 May 2010

26 May 2010

  • What’s Behind Foxconn Suicides? – Patrick Chovanec
    Interesting blog from Patrick Chovanec highlighting that the suicide rate for China as a whole, which in 1999 (the last year available) stood at 13.9 per 100,000 people is against nine suicides in five months in Foxconn’s (Hon Hai’s) Shenzhen factory working out to an average of 21.6 per year given >300,000 workers.

24 May 2010

23 May 2010

  • Coalition considers plan to sell off Britain’s roads – UK Telegraph
    Privatise the roads to pay for the deficit in the UK?
  • Europe’s deflation torture is a gift to the Far Left – UK Telegraph
    Evans-Pritchard captures the critical issue here about debt driven deflation in Europe… The Left always warned that EMU was a “Bankers’ Ramp”, an instrument of creditor control that would lock in reactionary policies. He notes German wage discipline relative to Southern Europe. Yes this is “virtuous”, but it exists in part because Germany possesses because of a cumulative history a huge industrial sector subject to international competition, unlike much of Southern Europe.

22 May 2010

  • Europeans Fear Crisis Threatens Liberal Benefits – New York Times
    Part of the restructuring will be a radical reworking of social security. Future benefits will be cut significantly, which will push personal responsibility back to the individual… This is a preferable path to cutting immediate programs that threaten to put Europe into a double dip.

21 May 2010

20 May 2010

19 May 2010

16 May 2010

15 May 2010

14 May 2010

  • Cutting now remains a risk to the recovery – Leading Articles, Opinion – The Independent
    Cuts seem set to drive Europe into double dip… at best?
  • Europe’s Newest Risk: Inflation – Wall Street Journal
    Fiscal tightening might force the printing press? Next step… inflation?
  • Experts concerned over huge loans to local govts – China Daily
    Behind the China property boom sits loans to local government backed vehicles. Much of China’s infrastructure spending, good or bad, sits within these local vehicles, which may be challenged to generate the cashflow to cover these debts in the short term, and are dependent on land sales. Fragile in a declining property environment? The Chinese authorities clearly need to be wary of property deflation, a challenge when they are also worried about inflation…
  • Thai General Shot; Army Moves to Face Protesters – New York Times
    New York Times reporter was interviewing the General Khattiya Sawatdiphol when he was shot.

13 May 2010

12 May 2010

11 May 2010

10 May 2010

  • Carbon tax likely, expert forecasts – China Daily
    Carbon credit trading is difficult because it is highly dependent on complex measurement processes to allocate legally determined tradeable rights. A carbon tax is far easier to operate. The Chinese are erring to the latter, unsurprising given their relative lower ideological conviction re the operation of market mechanisms. It would not be surprising if it gets them to the right place faster.
  • Maruti Suzuki Aims to Double Capacity – Wall Street Journal
  • India Car Sales Rise 39% – Wall Street Journal
    India powers on?

9 May 2010

7 May 2010

6 May 2010

5 May 2010

4 May 2010

3 May 2010

  • BP warned of rig fault ten years ago – Wall Street Journal
    It is true that Obama has suspended new drilling in the Gulf. However, currently approved drilling schedules will continue under existing guidelines. The suspension is temporary in nature, effects only yet-to-be approved work, and will be lifted once the root cause of the Macondo spill is determined and appropriate safety and environmental rectifications have taken placed. It is not intended (at this stage) to be a blanket ban on offshore drilling.
  • Spain Seen as Moving Slowly on Financial Reforms – New York Times
    Local politics around the world seems to gridlock effective action.
  • Twitter is the New CNN – PCMag
    Newsmedia could be radically altered by Twitter. Do not take Twitter lightly.
  • An antitrust app: Apple may be in the eye of regulatory storm – New York Post
    The question of the use of programming tools is a critical battleground between Apple, Adobe, and the developer community.
  • Apple Sells One Million iPads – New York Times
    Selling faster than iPhone…
  • Real estate sales witness big fall – China Daily
    Chinese policy starting to bite hard.
  • Tough rules set to drop home prices 30% – China Daily
  • Goodbye petabytes, hello zettabytes – The Guardian
    The digital universe grew 62% last year, and given iPad success nothing is slowing the rate of growth.
  • Basel regulators weigh cost of reform – Financial Times
    Whilst the US works through a  highly politicised regulatory review process, regulation is being considered through multiple other channels. One is the Basel Committee on Banking Regulation, the global forum for banking regulation. There is a debate on what the new rules would cost. Industry says 5%, committee chair says 0.5% to 1.0%.

2 May 2010

1 May 2010

  • Here’s How Facebook Can Turn Its Latest Privacy PR Disaster Into Gold – Business Insider
    Facebook’s biggest risk is itself… do we trust it with our identity? The next internet frontier may not how to organise all the data in the world, but our data?
  • Q&A with Niall Ferguson – Vancouver Sun
    Staying with Sovereign risk, Niall Ferguson the author of ‘The Ascent of Money: The Financial History of the World’ questions whether the UK will need a Greek style bailout sometime soon. This is a topic we are sure to be writing on soon.

30 April 2010

28 April 2010

27 April 2010

26 April 2010

25 April 2010

22 April 2010

21 April 2010

20 April 2010

  • Loonie soars as BoC reverses rate pledge – Vancouver Sun
    We are watching closely the Bank of Canada’s position on interest rates as one reference point for the Australian dollar. Canada has maintained significantly lower interest rates than Australia feeding our concerns as to the state of certain Canadian assets.

19 April 2010

  • China’s real estate time bomb ticking - China Daily
    The Chinese tighten further real estate funding. Domestic observers discussing possibilities of crash. Government trying to tighten whilst managing structural fears. Can they do it? Now seems they are intent on engineering price correction.
  • Goldman case likely to unleash torrent of lawsuits – Wall Street Journal
    The market has long expected some variant on this, of course when it finally happens the market will still react. The question is what are the longer term consequences. We have been wary of investments banks in part because of this risk.

18 April 2010

  • Brown in attack on Goldman Sachs - Financial Times
    The legal case on Goldman is now inevitably entering the political domain. Attacks on Goldman came in the UK and Germany on the weekend.

15 April 2010

14 April 2010

13 April 2010

  • Japan Bank Lending Fails – Wall Street Journal
    The incapacity of Japan to generate lending growth and pull itself out of its deflationary quagmire has the world mesmorized. Is it a portent for the West?
  • Banks Rebel Against Push to Redo Loans – Wall Street Journal
    We are focused on the evolution of bank regulation.
  • Bank Lending Slows in China – Wall Street Journal
    Also of profound interest to us are China’s efforts to pull back excess credit creation, and the impact on the real economy. The property sector is clearly vulnerable to this.
  • Obama calms China renminbi dispute – Financial Times
    Interestingly the American administration has moved away from confrontation to a diplomatic style. Does this presage positive resolution? Singapore allowed its currency to appreciate today.
  • Twitter’s One Real Problem. No, Not Developers! – gigaom.com
    More on how Facebook is becoming the anchor connecting force on the Net. Watch this space.
  • Global Financial Stability Report – International Monetary Fund
    The IMF published its April 2010 financial stability report. They pointed to spiralling sovereign debt in Europe, the US and Japan as the top threat to the global economy. They suggested that unless these countries addressed their high debt they risked setting off another ‘credit collapse’.

12 April 2010

11 April 2010

9 April 2010

8 April 2010

6 April 2010

2 April 2010

25 March 2010

21 March 2010

20 March 2010

19 March 2010

18 March 2010

17 March 2010

16 March 2010

15 March 2010

14 March 2010

12 March 2010

7 March 2010

2 March 2010

  • Hedge funds raise bets against Euro - Financial Times
    It seems more through the currency market as much as the credit markets that the hedge funds are testing the sustainability of government policy.

28 February 2010

26 February 2010

25 February 2010

24 February 2010

23 February 2010

22 February 2010

21 February 2010
20 February 2010
12 February 2010
27 January 2010

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